What is the primary difference between a bonded warehouse and an FTZ?

The primary distinction between a bonded warehouse and a Free Trade Zone (FTZ) is indeed rooted in their operational purposes. A bonded warehouse is specifically designed for the storage of goods that are under customs custody; typically, they are not allowed to be sold or distributed into the domestic market until duties are paid. The goods can remain in the warehouse until the importer decides to pay the applicable duties.

On the other hand, FTZs serve a broader purpose. They allow not just for storage but also for activities like manufacturing, assembling, or processing goods without the immediate need to pay tariffs or duties. This means businesses can engage in operations that add value to the goods before they enter the domestic market, which is not something a bonded warehouse can facilitate to the same extent.

The other options bring in aspects that don't accurately reflect the fundamental differences: FTZs can be located in various areas, not strictly coastal; they might have different regulations, but the key difference lies primarily in their functions; and while bonded warehouses cannot sell goods tax-free, FTZs are designed for flexibility in terms of processing and distribution of those goods. Hence, the assertion that a bonded warehouse is only used for storage and not manufacturing encapsulates the main operational limitation of that facility compared